Evaluating Gold's TrajectoryInterplay of Carney's "Failed Wave" and Elliott Wave Analysis
Introduction:
Is this another Gold trap? As we've observed, there have been several traps in this range, all triggered by harmonic patterns. Here we are facing another potential bearish setup. A breakout at $2,162 could signal a strong bullish trend, but there might be room for pause. Let's take a closer look.
Understanding the Failed Wave:
Scott Carney's "Failed Wave" concept is integral to our analysis of the gold market. This phenomenon occurs at the 1.13 Fibonacci extension level and can signal a potential market contraction and reversal if the price fails to close above it.
Current Market Position:
Gold’s interaction with the 1.13 extension level is under critical observation. A failure to sustain a move beyond this level might confirm the "Failed Wave," potentially initiating a bearish trend as predicted by harmonic patterns.
Elliott Wave Consideration:
The possibility of an Elliott Wave 5 truncation is noted, with Wave 1 starting on December 15th, 2015. Retracement zones are denoted in blue on the chart. If Gold Closes above $2162 this will start a wave 5 1.618 extension to $2370.36.
Breakout Potential and Target Prices:
If gold demonstrates strength by closing above the 1.13 level, it negates the "Failed Wave" scenario, potentially setting up a bullish progression. The breakout target zones are:
• Intermediate Target: $2,162 (Significant resistance level)
• Primary Target: $2,370.36 (1.618 Fibonacci extension)
Downside Support and Target Levels:
Should gold fail to maintain its momentum above the 1.13 extension, the following levels are critical:
• Initial Support Level: $2,048 - Orderblock Support (A significant level)
• Target 1: $1,959 - Terminal support
• Target 2: $1,880 - 0.5 Fibonacci zone (Elliott retest)
• Target 3: $1,812 - Harmonic T1 retest zone
Trading Considerations:
Traders might consider a dual approach, preparing for a "Failed Wave" with stop-losses above the 1.13 level & HOP level of $2162 at around $2190, and alternatively, considering long positions above this level targeting $2,370.36 at the 1.618 extension.
Concluding Perspective:
The gold market is at a significant technical juncture, with the price action near the 1.13 Fibonacci extension potentially dictating the mid to long-term market direction. The market is balancing between the potential for a "Failed Wave" and a bullish continuation towards the 1.618 Fibonacci extension target.
Disclaimer:
This report is for informational purposes only and does not constitute financial advice. Investors should conduct their own due diligence and consult with financial advisors before making any investment decisions. Trading involves risks, and personal risk tolerance and investment objectives should be carefully considered.
